CMO - Preliminary result and dividend

Tuesday 22nd August 2023

The Chair, Ash Waugh, today announced a Trading Profit after Tax for the 30 June 2023 financial year of $30.34m. While down 9% on the 2022 financial year, this is a strong result in a tightening market.

Mr Waugh noted light vehicle trading conditions had been inconsistent through the second half of the financial year, particularly due to changes in the clean car scheme and taxes on higher emitting vehicles driving short-term, artificial demand. Coupled with this came the challenge of ‘lumpy’ supply for key products. He said despite these challenges, the Company’s light vehicle dealerships generally posted strong full year results.

With the agricultural sector of the economy struggling with high inflation and cooling primary produce returns, the Company’s tractor dealerships experienced a challenging last quarter, but still posted a respectable full year result. In contrast, the heavy truck dealership’s results had remained steady, with strong demand persisting throughout the year. This level of demand, together with a volatile supply chain and congested local body building capacity had resulted in increased inventory levels, which was reflected in the year end accounts and would be carried throughout the new financial year.

On the property front, Mr Waugh confirmed building costs continued to escalate and the focus remained on those refurbishment projects already underway, with this pursued in preference to commencing any major new redevelopments. The results of the committed refurbishment and redevelopment programmes had come to fruition and he said the Company can be very proud of the Timaru Motors, Avon City Ford and Dunedin City Motors dealership facilities that were now completed.

In the coming year, redevelopment of the Fagan Motors sales and administration building in Masterton was planned. A major development in Palmerston North, to support the Company’s heavy vehicle operations in the Lower North Island, continued through the planning stages, but with construction expected to remain some time away yet. The impact of the negative economic environment on property values across the country had not spared the Group and this was reflected in the fair value adjustments at 30 June.

Mr Waugh stated that higher fuel prices, inflation Government interventions and a continued cooling economy were anticipated to take a heavier toll on the Company’s customers and the business into 2024 and potentially beyond. Balancing this outlook somewhat would be a continued refresh of products from both Ford and Mazda. Whilst overall the demand for new vehicles was forecast to decline, these new models, together with the improving availability of other hybrid and electrified vehicles, would support customer enquiry coming into the Company’s dealerships in a weakening market.

He confirmed that Management was continuing to explore new opportunities to expand on the Group’s core competencies in order to provide resilience to the overall operations. As new opportunities emerge, they would receive careful consideration of the necessary capital investment requirements and potential returns they may bring with them.

The Directors had declared a fully imputed dividend of 42 cps to be paid on Monday, 2 October 2023, with a record date of Friday, 22 September. This would take the total dividend for the year to 57 cps, 61% of the Trading Profit after Tax.

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